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Chinese AI competition could stall US AI investment boom
Confluence Investment Management says AI spending is estimated to contribute about one-third of current US economic growth, but rising competitive pressure from China could reverse that momentum.
Confluence Investment Management argues that the artificial intelligence boom has become a major driver of US economic growth and financial market returns, citing large-scale spending by both established technology firms and newer AI players. The firm says the investment has been redirected away from traditional office construction, with AI infrastructure demand extending to concrete and steel, cooling equipment, servers, cables, microprocessors, and memory chips.
The asset manager estimates that the AI investment frenzy accounts for perhaps one-third of current US economic growth. It also links the resulting demand to higher stock prices across companies spanning semiconductors to heavy equipment, even as it points to worries about stretched valuations, rising debt, and daisy-chain investment deals.
Confluence says US AI leaders face a competitive threat because Chinese firms have “caught up” technologically. It highlights that DeepSeek released a coding model, V4 Flash, in late July, with tests showing performance almost on par with Anthropic’s Opus 4.8, and that Moonshot AI’s Kimi K3 was released days earlier with tests indicating performance that rivals Opus 4.8 and OpenAI’s GPT-5.6 Sol.
In the firm’s view, the combination of rapid Chinese progress and the user experience advantages of more flexible, open-source models could be the catalyst that throws the US AI boom into reverse, with top US firms potentially losing ground.